How to Ensure That Your Success Will Feel Sweet
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Universal basic income has been a hot topic for several years. The idea is that everyone should get a guaranteed minimum salary sufficient to live on, regardless of what work they do—or even whether they work at all. Naturally enough, the policy has been much debated, even before evidence on its behavioral effects started to come in—as it now has.
The most high-profile recent evidence comes from an experiment funded by Sam Altman, the CEO of OpenAI, and undertaken by a team of economists at several top universities. In this case, 1,000 low-income people received $1,000 a month with no strings attached for three years. The results were mixed. Compared with a control group, the people who got this amount of money reduced their working hours a bit (as did their spouse or partner), which lowered their household earned income. On average, this monthly subsidy did not encourage its recipients to invest in education or find better employment; what it enabled was some additional leisure time.
Is that a worthy goal that justifies UBI as good policy? You decide—but for myself, I won’t know the answer until I find out whether the unearned income made anyone happier, a question that this study did not address.
For that matter, though, does any unearned income raise well-being and life satisfaction? Life offers dozens of ways you can chase resources you didn’t earn through regular work: gambling, fishing for a bequest, living on an inheritance, applying for a government grant, finding a wealthy patron. And why not? Cash is fungible, as economists say, and all money is good money when it comes to happiness, right?
Maybe not. I have written about the fact that not all dollars are created equal where well-being is concerned—neither dollars earned nor dollars spent. And unearned ones might be the least helpful of all to improve your life satisfaction.
[Read: Switzerland’s ‘money for nothing’ proposal]
Some scholars, in fact, believe that ecosystems have evolved a need to be productive for survival. This makes sense for humans as well: If your ancient ancestor was too leisurely or too much of a taker, they would likely not have survived long in troglodyte times.
The theory that we are indeed wired for achievement lines up with research that demonstrates how earning our success through hard work and merit leads to greater well-being. For example, scholars have found evidence for parents’ belief that when teenagers work for a paycheck, the employment generally has a beneficial effect—promoting responsibility, time-management skills, and self-esteem. Similarly, college students grow in confidence when they earn their good marks. And in a 2010 study of customer-loyalty schemes, researchers found that when people believed they were earning points (as opposed to merely being given points at high levels), they felt entitled to buy more of the product.
Getting free stuff typically doesn’t sit right with us. If your boss gave you a bonus and said, “You didn’t earn this, but you look like you need it,” that would probably rub you the wrong way. Likewise, if you tell a group of senior citizens that most of them are taking more out of the Social Security system than they ever paid in—which, on average, will be true—you will not get a friendly response.
Unearned money is a type of “windfall,” a term used by economists to mean unexpected or sudden gains. Research shows that when people feel they got something for nothing, they are more likely to use that money for leisurely purposes (as “fun money”) and in risky ways. To economists, this seems irrational: You should make the same spending decisions no matter what the income source is; after all, it’s not as if unearned dollar bills are stamped Use at Disney World or Waste on lottery tickets. But that’s not how humans think. And this lines up with the basic-income experiment that found people using their monthly windfall more on leisure than, say, education.
Windfall income also brings us less well-being than earned income, and can even lead to psychological problems. A number of studies showing this have looked at state lotteries: Research from 2018 on a large sample of lottery winners found that although people often report higher happiness right when they win, their measured mental health declines immediately afterward, especially for those with low education levels. The researchers found that these problems persisted for up to two years after a win.
The lottery might seem like a special case, especially when it involves people who are struggling with poverty and other issues. Let’s look at the other end of the wealth spectrum instead, at inheritances. Benefiting from a family member’s will would be pretty sweet, right? Not according to popular culture. In an episode of the drama series Succession, about a media mogul’s dysfunctional family, for example, the character Greg is ruminating to his relatives about his future, and mentions that he thinks he will be fine because his grandfather will leave him $5 million. “You can’t do anything with five, Greg. Five’s a nightmare,” his (already-wealthy) relative Connor informs him. Why? “Can’t retire. Not worth it to work. Oh, yes, five will drive you un poco loco, my fine-feathered friend.”
Inheriting wealth is not that bad, according to the data—but not that good, either: In a 2018 study of the happiness of millionaires, my colleague Michael I. Norton and his co-authors found that those who earned their fortune were moderately happier than those who were heir to one. This may be one reason that well-off Americans so enjoy telling the stories of how they strove to get to where they are. You could be forgiven for thinking that every rich person starts out in a tar-paper shack without running water, even though research shows that entrepreneurs tend to come from high-earning families.
[Read: The particular ways that being rich screws you up]
Altogether, the research suggests that unearned income is at best inferior as a happiness multiplier and at worst a Faustian bargain. This conclusion leads me to three ideas you might consider.
First, if possible, given your living situation, avoid spending any time, effort, or resources seeking out unearned income. So don’t gamble for any purpose other than your own entertainment, and don’t kiss up to rich old Uncle Joe in the hope that he leaves you a nice nest egg.
Second, keep an inventory of the unearned benefits you currently receive but don’t truly need. (For example, are you still on the family cellphone plan?) Try getting rid of an unearned income stream and see how it makes you feel about yourself and your relationships. A little poorer in financial terms but richer in self-esteem? There you go.
Third, remember that just as earned success is good for you, it can also be good for the people you love. But this all depends on how you model your example for them.
People constantly ask me what they should help their adult kids pay for, if they themselves have been lucky enough to do well in life. The dilemma they have is that they’re proud of having earned their way and feel that their self-reliance, not a handout, is the gift they want to pass on; yet they also feel that it’s stingy to hold out on their nearest and dearest, rather than share their good fortune.
Here’s a rule of thumb to help resolve that dilemma: If you can afford to help your adult kids, pay for investment, not consumption. In practice, that means: Education? Absolutely. Vacation? No way. Staking a business? Yes, if it seems a viable proposition (as opposed to mere whim or lifestyle choice). Wine cellar? Don’t be ridiculous. A down payment on a house? Judgment call. In this way, you are giving generously—to help them earn their own success.
[Arthur C. Brooks: Don’t wish for happiness. Work for it.]
The UBI study I began with did not produce results definitive enough to sway the economic-policy debate much in one direction or another. If the idea of providing an economic baseline is to give everyone a fair start, create opportunity, and avoid welfare dependency, the jury is still out. My hope is that the next round of research will take into consideration what matters most: well-being.
In the meantime, I do have one concrete proposal for raising the happiness of those most in need: The government could stop using lotteries to take the money that people do earn in exchange for the pipe dream of a fortune that they did not earn. State lotteries are just about the most regressive form of taxation imaginable: The Economist recently reported that America’s poorest households spend 33 times more than the richest households, as a share of their income, on lottery tickets. This is no surprise, because lotteries are specifically targeted at these households—and with an expected return of about 65 cents on the dollar, they are a truly terrible investment.
Until UBI is proved the panacea its advocates believe it to be, for governments that want to improve the well-being of their most vulnerable citizens, giving up their own unearned lottery income would be a good place to start.